Health Insurance Glossary
A
Accident
An event or occurrence which is unforeseen and unintended.
Accident Insurance
A form of health insurance against loss by accidental bodily injury.
Accumulation Period
A specified period of time, such as 90 days, during which the insured person
must incur eligible medical expenses at least equal to the deductible amount
in order to establish a benefit period under a major medical expense or comprehensive
medical expense policy.
Adjuster
A person who investigates and settles losses for an insurance carrier.
Adverse Selection
The tendency of persons who present a poorer-than-average risk to apply for,
or continue, insurance to a greater extent than do persons with average or better-than-average
expectations of loss.
Age Limits
Stipulated minimum and maximum ages below and above which the company will not
accept applications or may not renew policies.
Agent
An insurance company representative licensed by the state who solicits, negotiates
or effects contracts of insurance, and provides service to the policyholder
for the insurer.
Ambulatory Care
Medical services that are provided on an outpatient (non-hospitalized) basis.
Services may include diagnosis, treatment, and rehabilitation.
Application
A signed statement of facts made by a person applying for life insurance and
then used by the insurance company to decide whether or not to issue a policy.
The application becomes part of the insurance contract when the policy is issued.
Arbitration
A form of alternative dispute resolution where an unbiased person or panel renders
an opinion as to responsibility for or extent of a loss.
Association Group
A group formed from members of a trade or a professional association for group
insurance under one master health insurance contract.
Attending Physician Statement (APS)
More common referred to as "medical records", often acquired by an
insurance company to determine an applicant's state of health at the time of
applying for coverage. Your application for insurance authorizes the insurance
company to contact your physicians to obtain the records, either prior to approval
or once the policy has become effective.
B
Basic Hospital Insurance
Policy purchased primarily for the purpose of protecting against high costs
of hospitalization. Coverage is usually limited to room and board and miscellaneous
expenses incurred while admitted as "inpatient."
Benefit Levels
The maximum amount a person is entitled to receive for services while covered
under the policy.
Benefit Period
A period of time typically one to three years during which major medical benefits
are paid after the deductible is satisfied. When the benefit period ends, the
insured must then satisfy a new deductible in order to establish a new benefit
period.
Benefits
The amount payable by the insurance company to a claimant, assignee or beneficiary
under each coverage.
Board-Certified
A physician that has successfully completed an approved educational program
and evaluation process by the American Board of Medical Specialties. This rating
is designed to provide consumers with quality patient care.
Broker
A marketing specialist who represents buyers of property and liability insurance
and who deals with either agents or companies in arranging for the coverage
required by the customer.
C
Cafeteria Plan
Generic term for an employee benefit plan that allows employees to select among
the various group life, medical expense, disability, dental, and other plans
that best meet their specific needs. Also called flexible benefit plans
Calendar-Year Deductible
Amount payable by an insured during a calendar year before a group or individual
health insurance policy begins to pay for medical expenses.
Cancelable
A contract of health insurance that may be canceled during the policy term by
the insurer or insured.
Cancellation
The discontinuance of an insurance policy before its normal expiration date,
either by the insured or the company.
Capitation
A method of payment for health services in which a physician or hospital is
paid a fixed, per capita amount for each person served regardless of the actual
number of services provided to each person.
Certificate of Insurance
A statement of coverage issued to an individual insured under a group insurance
contract, outlining the insurance benefits and principal provisions applicable
to the member.
Claim
A request for payment of a loss, which may come under the terms of an insurance
contract.
Claims Adjustor
Person who settles claims, an agent, company adjustor, independent adjustor,
adjustment bureau, or public adjustor.
COBRA (Consolidated Omnibus Budget Reconciliation Act of 1986)
Hospital, medical, and miscellaneous health care expenses incurred by the insured
that entitle him/her to a payment of benefits under a health insurance policy.
Found most often in connection with major medical plans, the term defines, by
either description, reasonableness, or necessity to specify the type and amount
of expense which will be considered in the calculation of benefits. The length
of COBRA is typically 18 months, but may be continued for 36 months in some
case.
Coinsurance
A provision under which an insured who carries less than the stipulated percentage
of insurance to value, will receive a loss payment that is limited to the same
ratio which the amount of insurance bears to the amount required; a policy provision
frequently found in medical insurance, by which the insured person and the insurer
share the covered losses under a policy in a specified ratio, for example, 80
percent by the insurer and 20 percent by the insured.
Commission
The part of an insurance premium paid by the insurer to an agent or broker for
his services in procuring and servicing the insurance.
Composite Rate
One rate for all members of the group regardless of their status as single or
members of a family.
Comprehensive Major Medical Insurance
A policy designed to give the protection offered by both a basic and a major
medical health insurance policy. It is characterized by a low deductible amount,
a coinsurance feature, and high maximum benefits.
Concealment
Deliberate failure of an applicant for insurance to reveal a material fact to
the insurer.
Conditionally Renewable
Continuance provision of a health insurance policy under which the company cannot
cancel the policy during its term but can refuse to renew under certain conditions
stated in the contract.
Conditions
Provisions inserted in an insurance contract that qualify or place limitations
on the insurer's promise to perform.
Continuation
Allow terminated employees to continue their group health insurance coverage
under certain conditions.
Contributory
A group insurance plan issued to an employer under which both the employer and
employee contribute to the cost of the plan. Seventy-five percent of the eligible
employees must be insured.
Conversion Privilege
The right given to an insured person to change insurance without evidence of
medical insurability, usually to an individual policy upon termination of coverage
under a group contract.
Coverage
The scope of protection provided under a contract of insurance; any of several
risks covered by a policy.
Covered Expenses
Hospital, medical, and miscellaneous health care expenses incurred by the insured
that entitle him/her to a payment of benefits under a health insurance policy.
Found most often in connection with major medical plans, the term defines, by
either description, reasonableness, or necessity to specify the type and amount
of expense which will be considered in the calculation of benefits.
Co-payment
A specific charge for a specific medical service. This usually applies to office
visits and prescription benefits. For example, you may have a $10 co-payment
for office visits.
Creditable Coverage
The purpose of creditable coverage is to give you credit for prior health care
coverage. Upon termination of prior coverage, you are usually provided with
a "certificate of creditable coverage" that will show the length of
time that you were covered and the termination date of that coverage. This is
an important document because the length of prior coverage can determine your
benefits for preexisting conditions.
D
Deductible
The amount of money you must pay each year to cover your medical expenses before
your insurance policy begins to pay benefits.
Dental Insurance
Individual or group plan that helps pay costs of normal dental care as well
as damage to teeth from an accident.
Disability
A physical or a mental impairment that substantially limits one or more major
life activities of an individual. It may be partial or total.
Dependent Coverage
Insurance coverage on the head of the family that is extended to a spouse or
eligible children. Certain age restrictions for children usually apply.
Drug Formulary
List of preferred pharmacy products to be used by a managed care plan's network
of physicians. These are usually based on the effectiveness and cost of these
medications.
E
Effective Date
The date on which the insurance under a policy begins.
Eligibility Date
The date on which an individual member of a specified group becomes eligible
to apply for insurance under the (group life or health) insurance plan.
Eligibility Period
A specified length of time, frequently 31 days, following the eligibility date
during which an individual member of a particular group will remain eligible
to apply for insurance under a group life or health insurance policy without
evidence of insurability.
Eligibility Requirements
This term refers to the conditions which an employee must satisfy to participate
in a retirement plan, one such condition begin the completion from 1 to 3 years
of service with the employer, another the attainment of a specified age, such
as 25, or conditions which an employee must satisfy to obtain a retirement benefit,
such as the completion of 15 years of service and the attainment of age 65.
Eligible Employees
Those members of a group who have met the eligibility requirements under a group
life or health insurance plan.
Employee Certificate of Insurance
The employee's evidence of participation in a group insurance plan, consisting
of a brief summary of plan benefits. The employee is provided with a certificate
of insurance rather than the actual insurance policy.
Employee Contribution
The employee's share of the premium.
Employee Retirement Income Security Act (ERISA)
Legislation passed in 1974 applying to most private pension and welfare plans
that requires certain minimum standards to protect participating employees.
Employer Contribution
The employer's share of the premium.
Enrollee
An eligible individual who is enrolled in a health plan.
Evidence of Coverage
See Certificate of Insurance
Evidence of Insurability
Any statement of proof of a person's physical condition and/or other factual
information affecting his/her acceptance for insurance.
Exclusions
Specific conditions or circumstances listed in the policy for which the policy
will not provide benefit payments.
Exclusive Agent
An agent who is employed by one and only one insurance company and who solicits
business exclusively for that company.
Exclusive Provider Organization (EPO)
A type of preferred provider organization where individual members use particular
preferred providers rather than having a choice of a variety of preferred providers.
EPOs are characterized by a primary physician who monitors care and makes referrals
to a network of providers. People who belong to an EPO must receive their care
from affiliated providers; services rendered by unaffiliated providers are not
reimbursed.
F
Fee-for-Service
A payment system for health care where the provider is paid for each service
rendered rather than a pre-negotiated amount for each patient. This is the common
payment agreement as applies to PPO health plans.
Field Underwriting
The initial screening of an application for health insurance performed by the
sales person or broker to whom you originally submit the application. The decision
of the field underwriter is not the final decision. This may only be made by
the underwriter for the insurance company. However, most field underwriters
are familiar with the guidelines and can usually determine eligibility.
Formulary
See Drug Formulary
G
Gatekeeper
Also referred to as a Primary Care Physician, serves to control utilization
and referral of enrollees.
Generic Drug
A drug which is exactly the same as a brand name drug and is allowed to be produced
and marketed after the brand name drug's patent has expired.
Grace Period
A specified period after a premium payment is due, in which the policyholder
may make such payment, and during which the protection of the policy continues.
Grievance Procedure
A procedure which allows a member of a health plan or a provider of benefits
to express complaints and seek remedies.
Group Certificate
The document provided to each member of a group plan. It shows the benefits
provided under the group contract issued to the employer or other insured.
Group Contract
A contract of insurance made with an employer or other entity that covers a
group of persons identified as individuals by reference to their relationship
to the entity.
Group Insurance
Insurance written on a number of people under a single master policy, issued
to their employer or to an association with which they are affiliated.
H
Health History
A form used by underwriters to assist in evaluating groups or individuals to
determine if they acceptable risks.
Health Insurance
Insurance against financial losses resulting from sickness or accidental bodily
injury. Protection that provides payment of benefits for covered sickness or
injury. Included under this heading are various types of insurance such as accident
insurance, disability income insurance, medical expense insurance, and accidental
death and dismemberment insurance.
Health Insurance Portability and Accountability Act (HIPAA)
The Health Insurance Portability and Accountability Act of 1996, known as HIPAA,
includes important new - but limited - protections for millions of working Americans
and their families. HIPAA may: 1) Increase your ability to get health coverage
for yourself and your dependents if you start a new job; 2) Lower your chance
of losing existing health care coverage, whether you have that coverage through
a job, or through individual health insurance; 3) Help you maintain continuous
health coverage for yourself and your dependents when you change jobs; and 4)
Help you buy health insurance coverage on your own if you lose coverage under
an employer's group health plan and have no other health coverage available.
Among its specific protections, HIPAA: 1) Limits the use of pre-existing condition
exclusions; 2) Prohibits group health plans from discriminating by denying you
coverage or charging you extra for coverage based on your or your family member's
past or present poor health; 3) Guarantees certain small employers, and certain
individuals who lose job-related coverage, the right to purchase health insurance;
and 4) Guarantees, in most cases, that employers or individuals who purchase
health insurance can renew the coverage regardless of any health conditions
of individuals covered under the insurance policy. In short, HIPAA may lower
your chance of losing existing coverage, ease your ability to switch health
plans and/or help you buy coverage on your own if you lose your employer's plan
and have no other coverage available.
Health Maintenance Organization (HMO)
Prepaid health plans in which you pay a monthly premium and the HMO covers your
cost of care to see doctors within their network at pre-negotiated rates. You
must choose a primary care physician who coordinates all of your care and makes
referrals to any specialists you might need. If you are an HMO member and you
do not use the doctors, hospitals and clinics that participate in your plan's
network, you will usually bear the cost of those medical services.
Home Health Care
Care received at home as part-time skilled nursing care, speech therapy, physical
and occupational therapy, part-time services of home health aides or help from
homemakers or chore workers.
Hospice
Health care facility providing medical care and support services such as counseling
to terminally ill persons.
Hospital Affiliation
A contract whereby one or more hospitals agrees to provide benefits to members
of a specific health plan.
I
Incurred Claims
Incurred claims equal the claims paid during the policy year plus the claim
reserves as of the end of the policy year, minus the corresponding reserves
as of the beginning of the policy year. The difference between the year end
and beginning of the year claim reserves is called the increase in reserves
and may be added directly to the paid claims to produce the incurred claims.
Indemnity
Legal principle that specifies an insured should not collect more than the actual
cash value of a loss but should be restored to approximately the same financial
position as existed before the loss. Independent Adjustor: Claims adjustor who
offers his or her services to insurance companies and is compensated by a fee.
Independent Agent
An independent businessperson who usually represents two or more insurance companies
in a sales and service capacity and who is paid on a commission basis.
Individual Contract
A contract of health insurance made with an individual called the policyholder
or the insured, which normally covers such individual and, in certain instances,
members of his family.
Individual Deductible
Amount that an insured and each person of his or her family covered by the policy
must pay before the group or individual medical insurance policy begins to pay
for medical expenses.
Individual Insurance
Policies which provide protection to the policyholder and/or his/her family.
Sometimes called Personal Insurance as distinct from group and blanket insurance.
Insurability
Acceptability to the company of an applicant for insurance.
Insurable Risk
The conditions that make a risk insurable are (a) the peril insured against
must produce a definite loss not under the control of the insured, (b) there
must be a large number of homogeneous exposures subject to the same perils,
(c) the loss must be calculable and the cost of insuring it must be economically
feasible, (d) the peril must be unlikely to affect all insureds simultaneously,
and (e) the loss produced by a risk must be definite and have a potential to
be financially serious.
Insurance
A system under which individuals, businesses, and other organizations or entities,
in exchange for payment of a sum of money (a premium), are guaranteed compensation
for losses resulting from certain perils under specified conditions.
Insurance Company
An organization chartered to operate as an insurer. Any corporation primarily
engaged in the business of furnishing insurance protection to the public.
Insurance Commissioner
The top insurance regulatory official in a state.
Insured
A person or organization covered by an insurance policy, including the "named
insured" and any other parties for whom protection is provided under the
policy terms.
Insurer
The party to the insurance contract who promises to pay losses or benefits.
Also, any corporation engaged primarily in the business of furnishing insurance
to the public.
L
Lapse
The termination or discontinuance of an insurance policy due to non-payment
of a premium.
Lapsed Policy
A policy terminated for non-payment of premiums. The term is sometimes limited
to a termination occurring before the policy has cash or other surrender value.
Long-Term Care
The continuum of broad-ranged maintenance and health services to the chronically
ill, disabled, or retarded. Services may be provided on an inpatient (rehabilitation
facility, nursing home, mental hospital), outpatient, or at-home basis.
Lifetime Maximum
Maximum amount of benefits available to a member during their lifetime.
M
Major Medical Expense Insurance
A form of health insurance that provides benefits for most types of medical
expense up to a high maximum benefit, such as $250,000 or higher after a substantial
deductible, such as $500 or more. Such contracts may contain internal limits
and are normally subject to coinsurance.
Managed Care
Health care systems that integrate the financing and delivery of appropriate
health care services to covered individuals by arrangements with selected providers
to furnish a comprehensive set of health care services, explicit standards for
selection of health care providers, formal programs for ongoing quality assurance
and utilization review, and significant financial incentives for members to
use providers and procedures associated with the plan.
Master Policy
A policy that is issued to an employer or trustee, establishing a group insurance
plan for designated members of an eligible group.
Maximum Annual Benefit
The maximum amount that the insurance company will pay toward a specific benefit
in the calendar year.
Maximum Out-of-Pocket Costs
The most a member will pay per year toward their co-payments, coinsurance and
deductibles.
Medical Expense Insurance
A form of health insurance that provides benefits for expenses incurred for
medical care. This form of health insurance provides benefits for expenses of
physicians, hospital, nursing, and related health services, and supplies. These
benefits may be related to actual expense, specified sums, or services rendered.
Such insurance sometimes includes benefits for prevention and diagnosis as well
as treatment.
Medical Information Bureau (MIB)
A data pool service that stores coded information on health histories of persons
who have applied for insurance from subscribing companies.
Medically Necessary
A service or treatment which is absolutely necessary in treating a patient and
which could adversely affect the patients health if ignored or omitted.
Member
A person covered under the health plan (includes dependents).
Minimum Group
The least number of employees permitted under a state law to affect a group
for insurance purposes; the purpose is to maintain some sort of proper division
between individual policy insurance and the group forms.
Miscellaneous Expenses
Expenses in connection with hospital insurance, hospital charges other than
room and board, such as X-rays, drugs, laboratory fees, and other ancillary
charges. (Sometimes referred to as ancillary charges.)
MSA (Medical Savings Account)
A tax-advantaged personal savings account used in conjunction with a high deductible
health insurance policy. Individuals may contribute the equivalent of the annual
deductible into this tax-deferred savings account. These moneys are set aside
for qualified medical care expenses.
N
Noncontributory
A term applied to employee benefit plans under which the employer bears the
full cost of the benefits for the employees. One hundred percent of the eligible
employees must be insured.
Nonprofit Insurers
Persons organized under special state laws to provide hospital, medical, or
dental insurance on a nonprofit basis. The laws exempt them from certain types
of taxes.
O
Open Enrollment Period
A period during which members can elect to make changes to coverage or add eligible
dependents without proving insurability.
Out-of-Network
Refers to services provided by a physician or hospital that are not contracted
with the insurance company issuing coverage to the patient.
Out-of-Pocket Costs
Health Care costs that the covered person must pay out of his pocket and includes
such things as co-payments and deductibles.
Out-of-Pocket Maximum
The most money that you will be required to pay annually for deductibles and
coinsurance.
Outpatient
A patient who is not in the hospital in which he or she is receiving treatment.
P
Point-of-Service Plans (POS)
Often known as open-ended HMOs or PPOs, these plans permit insureds to choose
providers outside the plan yet are designed to encourage the use of network
providers.
Policy
The printed legal document stating the terms of the insurance contract that
is issued to the policyholder by the company.
Policyholder
A person who pays a premium to an insurance company in exchange for the insurance
protection provided by a policy of insurance.
Preexisting Condition
A physical and/or mental condition of an insured which first manifested itself
prior to the issuance of his/her policy or which existed prior to issuance and
for which treatment was received. A physical condition that existed before the
effective date of coverage.
Preferred Provider Organization (PPO)
A network of health care providers that have agreed to provide medical services
to a health plan's members at discounted costs. PPO members typically make their
own decisions about their health care rather than going through a primary care
physician like HMO member. The cost to use physicians within the PPO network
is less than using a non-network provider.
Premium
The sum paid by a policyholder to keep an insurance policy in force.
Primary Care Physician
Under an HMO or Point-of-Service (POS) plan, a primary care physician is usually
your first contact for health care. This is usually a general practitioner,
family practitioner, internal medicine or pediatrician. The primary care physician
makes referrals to specialists when medically necessary.
Probationary Period
A period from the policy date to a specified time, usually 180 days, during
which no sickness coverage is effective. It is designed to eliminate a sickness
actually contracted before the policy went into effect.
Provider
Any doctor, nurse or institution that provides medical care.
Q
Quote
A price estimate given to the potential consumer as he/she decides to which
company a formal application will be submitted. Company may be legally bound
to honor this quote in some jurisdictions and/or lines of business.
R
Rate
The pricing factor upon which the insurance buyer's premium is based.
Reasonable and Customary Charge
A charge for health care, which is consistent with the going rate or charge
in a certain geographical area for identical or similar services.
Referral
A formal process that authorizes an HMO member to get care from a specialist
or hospital. This referral usually comes from your primary care physician.
Reimbursement
The payment of the expenses actually incurred as a result of an accident or
sickness, but not to exceed any amount specified in the policy.
Reinstatement
The resumption of coverage under a policy which has lapsed.
Renewal
Continuance of coverage under a policy beyond its original term by the insurer's
acceptance of the premium for a new policy term.
Rescission
Termination of an insurance contract by the insurer on the grounds of material
misstatement on the application for insurance. The action of rescission must
take place within the contestable period or Time Limit on Certain Defenses but
takes effect as of the date of issue of the policy, thus voiding the contract
from its inception.
Rider
A document which amends the policy or certificate. It may increase or decrease
benefits, waive the condition of coverage or in any other way amend the original
contract.
S
Section 125 Plan
A plan which provides flexible benefits and qualifies under the IRS code which
allows employee contributions to be deducted with pre-tax dollars.
Short-Term Health Insurance
These plans are similar to individual and family health plans, but they have
a predetermined length of coverage. Coverage is usually from a minimum of 30
days up to a maximum of 12 months.
State Insurance Department
A department of a state government whose duty is to regulate the business of
insurance and give the public information on insurance.
T
"Ten Day Free Look"
A notice on the first page of health insurance policies that the insured has
ten days in which to examine the policy and return it for a refund of premium
if he is not satisfied with the policy.
Total Disability
An illness or injury, which prevents an insured person from continuously, performing
every duty pertaining to his/her occupation or engaging in any other type of
work.
Travel Accident Policy
A limited contract covering only accidents while an insured person is traveling,
usually on a commercial carrier.
U
Underwriter
A company that receives the premiums and accepts responsibility for the fulfillment
of the policy contract, the company employee who decides whether or not the
company should assume a particular risk, or the agent who sells the policy.
Underwriting
The process of selecting risks for insurance and determining in what amounts
and on what terms the insurance company will accept the risk.
Uninsurable Risk
One not acceptable for insurance due to excessive risk.
Usual, Customary and Reasonable (UCR)
See Reasonable and Customary
W
Waiting Period
The length of time an employee must wait from his/her date of employment or
application for coverage, to the date his/her insurance is effective.
Copyright © 1998-2002 allHealth Insurance Services, All
rights reserved.